Question

Itemized Deductions (LO. 4)

Rebecca and Irving incur the following medical expenses during 2018:

Medical insurance premiums $4,655 Hospital 970 Doctors 2,035 Dentist 595 Veterinarian 200 Chiropractor 225 Cosmetic surgery 1,405 Over-the-counter drugs 160 Prescription drugs 195 Crutches 110

They receive $3,815 in reimbursements from their insurance company of which $295 is for the cosmetic surgery.

Refer to Exhibit 8-2 to answer the following questions.

What is their medical expense deduction if their adjusted gross income is the following:

a. Adjusted gross income of $50,000. Their medical expense deduction is $_______.

b. Adjusted gross income of $61,000. Their medical expense deduction is $_______.

Answer 1

	Part - (a)	Particulars	Amount ($)
		Medical insurance premiums	4,655
		Hospital	970
		Doctors	2035
		Dentist	595
		Chiropractor	225
		Prescription drugs	195
		Crutches	110
		Total Allowable medical expenses	8,785
		Less: Insurance reimbursements (3815-295)	(3,520)
		Unreimbursed medical expenses	5265
		Less: AGI limitation ($50000 x 7.5%)	(3750)
		Medical expense deduction	1515
	Part - (b)	Particulars	Amount ($)
		Medical insurance premiums	4655
		Hospital	970
		Doctors	2035
		Dentist	595
		Chiropractor	225
		Prescription drugs	195
		Crutches	110
		Total Allowable medical expenses	8785
		Less: Insurance reimbursements (3815-295)	(3,520)
		Unreimbursed medical expenses	5265
		Less: AGI limitation ($61000 x 7.5%)	(4,575)
		Medical expense deduction	690